The Drivers Module shows relationships between Alphabet's most relevant fundamental drivers and provides multiple suggestions of what could possibly affect the performance of Alphabet over time as well as its relative position and ranking within its peers. Please also check Risk vs Return Analysis
Alphabet Return On Equity vs. Price to Earning Fundamental AnalysisAlphabet is rated # 2 in price to earning category among related companies. It is rated below average in return on equity category among related companies reporting about 0.22 of Return On Equity per Price to Earning. The ratio of Price to Earning to Return On Equity for Alphabet is roughly 4.50 Price to Earnings ratio is typically used for current valuation of a company and is one of the most popular ratios that investor monitor on a daily basis. Holding a low PE stock is less risky because. When a company's profitability fall, it is likely that earnings will also go down..In other words, if you start from a lower position your downside risk is limited. There are also some investors who believe that low Price to Earnings ratio reflects the low pricing because a given company is in trouble. On the other hand, a higher PE ratio means that investors are paying more for each unit of profit.
Generally speaking, the Price to Earnings ratio gives investors an idea of what the market is willing to pay for the company's current earnings.Return on Equity or ROE tells company stockholders how effectually their money is being utilized or reinvested. It is a useful ratio when analyzing company profitability or the management effectiveness given the capital invested by the shareholders. ROE shows how effecently a company utilizes investments to generate income.
For most industries Return on Equity between 10% and 30% are considered desirable to provide dividends to owners and have funds for future growth of the company. Investors should be very careful using ROE as the only efficiency indicator because ROE can be high if a company is heavily leveraged.